The services economy contracted in April for the third month in a row and at the fastest pace since just after the September 11 attacks on the US in 2001.
The latest NCB Purchasing Managers' Service index for businesses ranging from transport to banking fell to 45.2 in April from 48.1 in March, sinking further below the 50 mark separating growth from contraction.
NCB said the sharp decline in activity was attributed to lower new business levels as firms reported reduced property and construction related activities in particular.
New business volumes declined for the third month in a row in April. NCB said that reports of the poor economic health of the construction sector was adversely affecting demand. Firms surveyed also mentioned deteriorating global economic conditions and greater competition.
Service sector employment declined for the second month in a row last month, linked to lower new business volumes and on-going economic uncertainty.
Input cost inflation also accelerated to its sharpest rate for 22 months in April. This rise was linked to higher staff salaries and increased energy and transport costs.
The report also said that confidence regarding activity in a year's time was at its lowest since September 2001.
Worsening economic conditions had dampened expectations, while the continuing credit crisis and weakness of the construction credit crisis and weakness of the construction sector also contributed to a negative outlook.